Buying a pharmacy can be a complex undertaking, even more so when the pharmacy you are buying holds a sponsor licence. A sponsor licence is a licence issued to employers by the Home Office which allows them to employ non-British, non-Irish workers. As a result of free movement ending on 31 December 2020, many business have accepted the Government’s recommendation to obtain a sponsor licence in order to meet their current and future recruitment needs. For more information on sponsor licences have a look at our previous blog.
Pharmacy businesses can use a sponsor licence to recruit the following roles; Pharmacists, Chemist (pharmaceutical), Dispensary manager, Pharmaceutical chemist, Pharmacist and Pharmacy manager. It is therefore worth checking if the pharmacy business you are acquiring holds a licence, and you can check here. The reason it is important to have immigration issues on the radar, is that if you or those advising you miss this out, it could result in any sponsored workers at the pharmacy losing their right to live and work in the UK.
This blog post will outline key considerations for new owners when purchasing a pharmacy with a sponsor Licence. The blog post will address what happens when Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as “TUPE”) applies and when TUPE does not apply and what impact this has on the sponsor licence.
What is TUPE?
A TUPE transfer may occur where there is a transfer of a business (or undertaking) or part of a business (or undertaking) that retains its identity after the transfer (a business transfer). For example, the sale of a pharmacy business. A TUPE transfer may also occur where a client engages a contractor to do work on its behalf, reassigns such a contract or brings the work "in-house" (a service provision change). For example, where an organisation decides to stop doing cleaning internally and outsources it to a contractor who will provide the same service externally.
Where TUPE applies, the transferor’s (e.g. the seller of the business) employees, who are assigned to the business or service, automatically transfer to the transferee’s (e.g. the buyer of the business) employment on their existing terms and conditions of employment. Put simply, the transferee effectively “steps into the shoes” of the transferor with regard to the transferring employees’ employment and all of the transferor’s rights, powers, duties and liabilities under or in connection with the transferring employees' employment contracts pass to the transferee.
TUPE does not apply to the purchase of shares in a company and will also not apply in some cases where the transferring business or service will not be the same after the transfer. However, TUPE is a complex area and expert advice should be sought as to whether TUPE applies at an early stage. For example, it is possible for TUPE to apply to any inter-group transfers following a share purchase.
A share purchase is where a buyer purchases the shares in a company. Unlike a business transfer where TUPE applies, the employees’ employer will not change in the case of share purchase (the employer will remain the company), however, the owners of the company may change or the proportionate number of shares each owners holds in the company may change.
Sponsored Workers and TUPE
When a seller holds a sponsor licence and sponsors workers in the circumstances where TUPE applies, the new owner (i.e. the new employer) becomes responsible for the sponsored workers. The new owner must comply with the relevant duties including reporting any changes to the Home Office such as when a sponsor worker leaves their employment or if you change the name and address of your business. However, a sponsored worker who transfers under TUPE does not need to make a new visa application if their role remains the same after the transfer.
If the new owner does not already hold the appropriate sponsor licence they must apply within 20 working days of the transaction completing for a new sponsor licence. If they fail to apply, or their sponsor licence application is refused, the visas of all sponsored workers are likely be curtailed so that they only have 60 days left on their visa. Either they will have to find a new sponsor within this period or they and their dependants will have to leave the UK. This is obviously extremely serious for the new owner and the sponsored workers. To avoid this happening we recommend that you seek specialist immigration advice as soon as you identify that you are buying a business or taking over a service where there are sponsored workers. The Home Office maintain a Register of licensed sponsor holders, and you can check the Register here. Understanding whether there are any sponsored workers should form part of your diligence process.
Jessica is a pharmacist from Canada working in the UK on a Skilled Worker visa. The pharmacy she works for has been purchased by a new owner and Jessica’s employment is protected by the TUPE regulations.
The new owner of the pharmacy does not hold a sponsor licence and they must quickly apply for a sponsor licence within 20 working days of purchasing the pharmacy to continue to employ Jessica. The new owner applies for a sponsor licence and Jessica can continue her employment as a pharmacist without making a new visa application.
Importantly Jessica can only work in the role that she is sponsored to do in her circumstances as a “Pharmacist”. This means she could not also do a lower skilled role. For example, she could not be working on the counter to cover lunch hour.
Sponsored Workers and Share Deals
In the case of a share deal where there is a change in direct ownership of the sponsor (i.e. the employer), the sponsor licence will be revoked. This applies even though the sponsored worker’s employer has not changed and their employment is continuing. In these circumstances, the company’s new owners must apply for a sponsor licence, if they do not already have one.
For the Home Office, one of the fundamental principles of the sponsor licence system is that the owners of the business accept responsibility for the international employees that they sponsor. Therefore, where a share sale ‘results in the controlling number of shares being transferred to a new owner’, the Home Office require the new owner to obtain a sponsor licence.
It is not uncommon for this aspect of sponsor licence compliance to be missed, as there is a misconception that changes to sponsor licences are only required in cases where TUPE applies. Additionally, it can seem odd to businesses where there is no change to the key personnel involved, that the Home Office would require the business to go through the process of applying for a new sponsor licence. However, the rules are clear, and are enforced in practice by the Home Office. Therefore, it is important that when buying shares in a company, consideration is given to any sponsor licence issues at any early stage.
Businesses who require further information and advice in respect of obtaining or maintaining their Sponsor Licence or other visa routes should contact our specialist Immigration team on 03330 430350 or by email email@example.com for further information and advice. If you have questions or concerns about TUPE transfers or employment matters, our Employment team can be contacted on 03330 430350 or by email firstname.lastname@example.org.